Hymans Robertson has advised the £150m Institution of Engineering and Technology (“IET”) Superannuation and Assurance Scheme on a £32m medically underwritten buy-in with a specialist insurer. This “top slice” buy-in, completed earlier in 2015, covers the pension scheme’s highest liability pensioner members.

In common with many of the UK pension schemes, the Trustees and the IET recognised that their scheme was exposed to a significant concentration of risk, with a small number of pensioners representing a very large proportion of their liability. Their objective was to tackle this risk in a cost effective way, to improve member security and reduce financial volatility.

The Trustees made use of Hymans Robertson’s medically underwritten buy-in service which was launched in 2013 to complete this transaction.

Harold Lewis, IET Independent Trustee from BESTrustees plc said:

The Trustees are delighted to have been able to insure the section of its pensioner liabilities that represented the greatest concentration of risk. Furthermore, to complete this insurance at a highly competitive price that was close to our technical provisions reserves is a great outcome for all Scheme members.

James Mullins, Partner and Head of Buy-out Solutions at Hymans Robertson said:

Pricing has been such that the IET Scheme, and pension schemes more generally, could exchange gilts (a broad matching asset) for a medically underwritten buy-in (a perfect matching asset, including protecting against life expectancy and proportion married risk) without any cost implications nor any need to increase company contributions. Medically underwritten buy-ins have now covered around £2bilion of liabilities across well over 50 pension schemes, from a standing start in 2013.

Ed Almond, IET Director of Finance & Planning said:

With long-term risk reduction a shared goal for the scheme and sponsor, the ability to execute a partial buy-in and reduce risk without a liability premium falling on the employer has been a welcome step from the IET’s perspective.

Hymans Robertson has been one of the pioneers of the medically underwritten buy-in market, recognising the significant benefit for its pension scheme clients. The popularity of their medically underwritten buy-in service means that Hymans Robertson has been involved in over 25% of the medically underwritten buy-in activity to date.

BESTrustees plc is one of the UK's leading independent pension trustee companies. As an organisation, BESTrustees provides independent trustee services to more than 140 pension funds with total assets in excess of £70bn.